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Northwestern announced Tuesday it is launching a two-year research and development project to strengthen local news business models.

To increase reader engagement and help improve trust in media, the Medill School of Journalism will lead the Northwestern Local News Initiative in examining how readers engage with local news online, according to a news release.

A $300,000 grant from Lilly Endowment Inc., along with other gifts from donors and alumni, will help support the initiative, the release said. NU will partner with three newspapers — the Chicago Tribune, The Indianapolis Star and the San Francisco Chronicle — to form “Learning Labs” that will be used to develop new tools for improving reader engagement and financial sustainability.

Tim Franklin, senior associate dean at Medill and the initiative’s leader, told The Daily he wanted to partner with news organizations from different ownership groups. The Indianapolis Star is owned by Gannett, the San Francisco Chronicle is owned by Hearst and the Chicago Tribune is owned by Tronc. Franklin noted the San Francisco Chronicle’s proximity to NU’s new San Francisco campus and Medill’s long standing relationship with the Tribune.

Internal discussions about the project date back to last summer, Franklin said. He stressed the importance of local news and said he was involved in a local news project during his time as Poynter Institute president.

“There is no question that the shrinkage of local news coverage, I think, is one of the biggest crises facing local journalism today, and, I would also argue, a real issue for our democracy,” Franklin said.

The Medill IMC Spiegel Digital & Database Research Center and the Knight Lab will both participate in the initiative, according to the release. As the center analyzes anonymous data about readers’ engagement with news coverage at the Learning Labs, faculty and staff at the Knight Lab will interview residents in the local markets and gather data on news consumption.

Medill Prof. Tom Collinger, executive director of the Spiegel Research Center, could not immediately be reached for comment.

Franklin said he was interested in using existing resources at NU, particularly the Spiegel Research Center’s sophisticated data mining and analytics surrounding audience behavior. The center can detect tendencies including how often readers share content online and on which platforms they typically read news stories, he said.

“They can determine with great sophistication the behaviors that lead readers to become subscribers, to consume advertising or to cancel digital subscriptions,” Franklin said. “It’s incredibly valuable research and information that news organizations need these days.”

According to the release, research from the Knight Lab and the Spiegel Research Center will be used to launch the initiative’s product development and experimentation phase early next year.

Audrey Cooper, editor in chief of the San Francisco Chronicle, said in the release that her publication is “thrilled” to collaborate with Medill.

“Getting better insight into what readers need to know and how they want to learn about vital topics of the day is a key part of what will help us continue to serve the people of Northern California for generations to come, and I’m confident this project will go a long way in helping us reach those goals,” Cooper said.

Franklin would not say how much money NU has raised for the initiative, but added that fundraising efforts are ongoing. He said the data research will begin after non-disclosure agreements with the three Learning Labs are signed.

Although the initiative is launching as a partnership with three newspapers, Franklin stressed that it is a national project.

“We will be creating a new channel on the Medill site and we will be sharing the learnings and best practices and successes and even some of the setbacks nationally so that the whole industry can learn from this work,” he said. “It’s not just three local news organizations that are trying to figure this out.”